As consumer preferences shift towards high-quality yet affordable options, a new wave of luxury brands is gaining traction in the market. Amidst this shift in dynamics, we present top luxury stocks Canada Goose Holdings Inc. (GOOS), Movado Group, Inc. (MOV), and Brilliant Earth Group, Inc. (BRLT) are emerging as attractive investment opportunities. These stocks currently seem quite undervalued, indicating potential.
As the luxury fashion market continues to evolve, emerging trends such as sustainability, direct-to-consumer (DTC) business models, and collaborations with fast fashion retailers are reshaping the industry. Companies that embrace personalization and innovative approaches to meet consumer demands are gaining significant market share.
The global luxury fashion market is projected to reach $145.40 billion in revenue this year, and is projected to grow at a CAGR of 3.2% from 2024 to 2029. The United States remains the largest market, generating $35 billion in 2024. Additionally, the increasing focus on personalized experiences and sustainability initiatives further enhances the appeal of the sector.
Considering these conducive trends, let’s examine the Fashion & Luxury stocks in detail.
Stock #3: Canada Goose Holdings Inc. (GOOS)
GOOS, headquartered in Toronto, Canada, is a performance luxury apparel brand offering parkas, jackets, rainwear, footwear, and accessories for men, women, youth, and children.
In terms of forward non-GAAP P/E, GOOS is currently trading at 13.17x, 24% lower than the industry average of 17.32x. Its forward EV/EBIT multiple of 12.78 is 18% below the 15.59x industry average.
On November 19, GOOS announced that the Toronto Stock Exchange (TSX) approved the renewal of its normal course issuer bid (NCIB). This allows the company to repurchase up to 4,556,841 subordinate voting shares, representing 10% of its public float, between November 22, 2024, and November 21, 2025.
During the fiscal second quarter that ended September 29, 2024, GOOS’s revenue stood at CAD267.80 million ($191.74 million). Its operating income reached CAD1.60 million ($1.15 million). In addition, the company’s adjusted net income and adjusted net income per diluted share attributable to shareholders of the company came in at CAD4 million ($2.86 million) and CAD0.05, respectively.
Analysts expect GOOS’s EPS for the quarter ended September 30, 2024, to increase 5.5% year-over-year to $1.08. Its revenue for the same quarter is likely to be $441.51 million. It surpassed the Street EPS and revenue estimates in each of the trailing four quarters, which is impressive.
Over the past year, the stock has declined 10.6% to close the last trading session at $9.50.
GOOS’s POWR Ratings reflect its robust outlook. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
GOOS has a B grade in Value and Quality. It is ranked #34 out of 61 stocks in the B-rated Fashion & Luxury industry.
Beyond what we have stated above, we also have given GOOS grades for Growth, Momentum, Stability, and Sentiment. Get all the GOOS’s ratings here.
Stock #2: Movado Group, Inc. (MOV)
MOV designs and markets watches under brands like Movado and licensed names such as Coach and Tommy Hilfiger. It serves jewelry stores, department stores, and online marketplaces while also offering jewelry and direct e-commerce sales.
In terms of forward EV/Sales, MOV is currently trading at 0.49x, 62.4% lower than the industry average of 1.29x. Its forward Price/Sales multiple of 0.64 is 33.7% below the 0.95x industry average.
On September 4, MOV announced its global campaign, "When I Move You Move," featuring a star-studded lineup of brand ambassadors. The campaign highlights dynamic energy and connection, reinforcing Movado’s legacy in a vibrant and engaging way.
It pays an annual dividend of $1.40, which translates to a dividend yield of 7.5% at the prevailing price levels.
In the fiscal second quarter ended July 31, 2024, MOV’s net sales was $159.31 million. It reported a operating income of $3.03 million. Moreover, its net income and net income per share attributable to Movado Group, Inc. stood at $3.86 million and $0.16, respectively.
Street expects MOV’s revenue for the quarter ending October 31, 2024, to increase marginally year-over-year to $187.70 million. Its EPS for the same quarter is likely to be $0.32. It surpassed the consensus EPS estimates in all of the trailing four quarters.
The stock plunged to 1.3% in the past month to close the last trading session at $19.07.
MOV’s POWR Ratings reflect strong prospects.
It has a B grade for Value and Sentiment. It is ranked #33 out of 61 stocks in the same industry.
To access MOV’s Growth, Stability, Momentum, and Quality ratings, click here.
Stock #1: Brilliant Earth Group, Inc. (BRLT)
BRLT designs and sells diamonds, gemstones, and fine jewelry, including engagement and wedding rings. It serves customers globally through its e-commerce platform and showrooms, offering an omnichannel shopping experience.
In terms of forward EV/Sales, BRLT is currently trading at 0.15x, 99.8% lower than the industry average of 1.29x. Its forward EV/EBIT multiple of 8.11 is 48% below the 15.59x industry average.
On September 6, BRLT announced the expansion of its international shopping capabilities to better serve customers worldwide. The brand's growing global presence, emphasizing its commitment to delivering a seamless digital shopping experience and ethically sourced fine jewelry.
BRLT posted net sales of $99.87 million in the third quarter that ended on September 30, 2024. Its adjusted net income was $1.49 million, and its EPS came in at $0.02.
Street expects BRLT’s revenue for the fiscal year (ending December 2024) to be $418.36 million. Its EPS for the same period is expected to be $0.06. In addition, it surpassed the consensus EPS estimates in each of the trailing four quarters.
Shares of BRLT have dipped 1.8% over the past month to close the last trading session at $1.65.
BRLT’s bright prospects are apparent in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
It has an A grade for Value and a B grade for Sentiment and Quality. Within the same industry, it is ranked #9.
Click here to see BRLT’s ratings for Growth, Value, Momentum, and Stability.
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GOOS shares were unchanged in premarket trading Friday. Year-to-date, GOOS has declined -19.83%, versus a 26.05% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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